Correlation Between MSA Safety and Geo

Can any of the company-specific risk be diversified away by investing in both MSA Safety and Geo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MSA Safety and Geo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MSA Safety and Geo Group, you can compare the effects of market volatilities on MSA Safety and Geo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MSA Safety with a short position of Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSA Safety and Geo.

Diversification Opportunities for MSA Safety and Geo

0.11

Correlation Coefficient

MSA Safety  Geo

Average diversification

The 3 months correlation between MSA and Geo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding MSA Safety and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Group and MSA Safety is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MSA Safety are associated (or correlated) with Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of MSA Safety i.e., MSA Safety and Geo go up and down completely randomly.

Pair Corralation between MSA Safety and Geo

Considering the 90-day investment horizon MSA Safety is expected to generate 12.71 times less return on investment than Geo. But when comparing it to its historical volatility, MSA Safety is 2.84 times less risky than Geo. It trades about 0.03 of its potential returns per unit of risk. Geo Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  860.00  in Geo Group on September 26, 2024 and sell it today you would earn a total of  1,941  from holding Geo Group or generate 225.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MSA Safety  vs.  Geo Group

MSA Safety

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSA Safety has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Geo Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Geo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSA Safety and Geo

The main advantage of trading using opposite MSA Safety and Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSA Safety position performs unexpectedly, Geo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Geo will offset losses from the drop in Geo's long position.

The idea behind MSA Safety and Geo Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.